Rate skirmishes between car financing companies continue despite the recent increase in interest rates. Last week, AIB introduced a fixed rate of 9.9 per cent APR for hire-purchase agreements. This rate is up from the 9.1 APR available in March.

The term "hire-purchase" means the customer does not own the car until all payments are completed.

Under AIB's new higher rate, the company claims a customer taking out a £10,000 loan over four years pays 48 payments of £250.70. If payment protection cover is included, the payments increase to £280.80 a month. In addition, AIB charges a £50 arrangement fee and a £20 end of contract legal fee.

Credit facilities are subject to a customer's repayment capacity and financial status and are not available to those under 18. Most finance and leasing companies, and banks, are offering car loan and financing rates of between 9 and 11 per cent.